Clunkers program could drive used car prices up

Discussion in 'Politics' started by Kevin_Kennedy, Aug 9, 2009.

  1. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Clunkers program could drive used car prices up - USATODAY.com

    This is one reason why the government should have scrapped the Cash for Clunkers nonsense. How does an increase in the price of used cars help low or middle income families who can't afford a new car?
     
  2. VaYank5150
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    VaYank5150 Gold Member

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    By offering them up to $4500.00 for their old one? Let's be honest, if we are TRULY concerned about the "middle income families who can't afford a new car", what's the chance of them getting $4500.00 for it as a traditional trade-in?
     
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  3. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    Alright, looking at Ford's website it appears that their cheapest car is the Ford Focus-Sedan.

    Ford Vehicle Showroom

    Let's do the math.

    A family turns in their clunker for $4500 but they must buy a new car and they settle for the Ford Focus-Sedan. Now Ford's website prices the Focus at $15,995, so they put their $4500 towards the new Focus of course. They now owe $11,495 for the Ford Focus-Sedan. For a low or middle-income family, taking on over $11,000 in debt is not a good financial decision. A used car is a much better decision, financially, but now the price of those used cars are being driven up by government intervention in the market. So I ask again, how does paying more for a used car, or buying a new car they can't afford, help these people?
     
  4. VaYank5150
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    VaYank5150 Gold Member

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    Please show me an <$11,000.00 used car with a new car warranty.
     
  5. Kevin_Kennedy
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    Kevin_Kennedy Defend Liberty

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    That's the tradeoff between a new and used car. The point was that for a family that can't afford to take on $11,000+ of debt then a used car is obviously a better choice for them. Would the new car with the nice warranty be nice? Of course. But if you can't afford it you can't afford it. Therefore, the Cash for Clunkers program hurts those that still can't afford a new car by raising the prices of used cars.
     
  6. garyd
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    garyd Senior Member

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    Good call Kev but I suspect you're trying to argue math with a guy who has a religious belief that 2+2 =5.

    The cheapest available new car that I know of is a KIA at $8900+. My wife doesn't work for money I make just under 30k a year. When I buy a car I usually pay around 1,000 dollars. And I get rid of a car when I can no longer find anyone who can fix the car I currently have. I still owe 4400 on the Kia which still leaves me with larger payments than I care to make.
     
  7. Care4all
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    Care4all Warrior Princess Supporting Member

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    Do you know how many used cars are sold a year and what percentage the 750k or let's say 400k in resalable condition would have been to the total used cars sold a year?

    I am trying to figure out what percentage these clunkers are to the total used car business?

    Anyway, on your scenario above...NO ONE IS FORCING the individual to take the cash for clunkers program are they? don't individuals have free choice in this country?

    What the poor family could do is SELL THEIR CLUNKER on the free market, and then buy another used car with it....

    IF WHAT YOU SAY is correct and used car prices will rise because of the shortage, then this "poor person" can sell his own car and GET MORE FOR IT, before he buys the newer used car.... He will get more for his old one, and pay more for the newer used car he buys...but it would be a wash.

    Care
     
  8. dilloduck
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    dilloduck Diamond Member

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    What the poor family should be able to do is get $4,500 for selling their clunker to the government and then be able to do whatever the hell they want to with the money.
     
  9. editec
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    editec Mr. Forgot-it-All

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    A reasonable complaint, I think, Kevin.

    yes it seems obvious to me that this program is going to drive up the value of clunkers somewhat.

    However, ssince many of those clunkers are currently driven by people who cannot afford to trade them in, and since I suspect that number exceeds the numbers of people who can trade them in, I think the problem (while valid) won't be significant.
     
  10. Care4all
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    Care4all Warrior Princess Supporting Member

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    not a bad idea! It won't help the new car business as much as this did, but it certainly would help the used car business. because all those clunkards turned in individually, will have to be replaced.

    care
     

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